Cybercriminals and traders charged with $100m ‘newswire fraud’

An international team of hackers and traders who benefited from illegal pre-publication access to company finance updates have been charged with fraud.

Fraud charges have been brought against an international team of cybercriminals and traders who netted more than $100 million in illegal profits, the US Securities and Exchange Commission (SEC) has announced.

A total of 32 individuals from around the world were involved in the scheme, which saw them benefit from ‘early access’ to financial information that had yet to be made public.

It is alleged that over a five-year period, Ivan Turchynov and Oleksandr Ieremenko, from Ukraine, used “advanced techniques” to hack into three major newswire services, the SEC explained.

In doing so, they were able to see corporate earnings announcements before they were scheduled to be published by Business Wire, Marketwired and PR Newswire.

This information was subsequently sent to traders in the US, Cyprus, Russia, Ukraine, Malta and France, who, in turn, bought and sold shares to their own benefit.

“This cyberhacking scheme is one of the most intricate and sophisticated trading rings that we have ever seen, spanning the globe and involving dozens of individuals and entities,” commented Andrew Ceresney, director of the SEC’s Division of Enforcement.

“Our use of innovative analytical tools to find suspicious trading patterns and expose misconduct demonstrates that no trading scheme is beyond our ability to unwind.”

According to the SEC, Mr Turchynov and Mr Ieremenko were able to go undetected through the use of proxy servers as a way of obscuring their true identities.

Confident that their illegal activities had not been picked up, the cybercriminals then set about recruiting traders, asking for a slice of their profits in return for this insight.

Business Wire and PR Newswire have both released statements concerning the case. A spokesman for Marketwired was quoted by the BBC as saying: “Protecting our customers’ information is one of our highest priorities.

“We found and fixed the issue at the heart of this matter and we are confident that Marketwired is protected by world-class security, monitoring and prevention practices.”